Bottom line: Baidu’s first-ever loss since going public reflects a long-anticipated decline for its core search business, which could mark the start of a longer-term decline due to lack of a strong new business lines.
Baidu in search of search replacement
It seems that profits are increasingly hard to come by these days on China’s Internet. That’s the major takeaway coming in the latest results from search giant Baidu(Nasdaq: BIDU), which has just posted its first loss since becoming a publicly listed company 14 years ago. Perhaps most worrisome, the biggest issue appears to lie in Baidu’s core search business, always a cash cow in the past, whose operating profits tumbled in the first three months of the year.
The surprise loss is one of the first-ever that I can recall for China’s three largest Internet companies or the BAT, namely Baidu, Alibaba(NYSE: BABA) and Tencent (HKEx: 700). That’s led many to wonder whether Baidu’s glory days are fast fading into the rear-view mirror, or whether perhaps this company has another trick pony beyond its search business that has sustained it for years. Read Full Post…
Bottom line: Tencent and NetEase will become long-term beneficiaries of a cleanup of China’s online game sector, despite their lack of new launches so far following the recent end of a 10-month freeze on approval of new titles.
No new approvals for Tencent, NetEase
China’s 10-month freeze on approval of new online games has official ended, but don’t tell that to industry leaders Tencent(HKEx: 700) and NetEase (Nasdaq: NTES). China’s gaming regulator has officially just published its latest list of newly approved game titles, which is its third since it resumed such approvals in late December. (English article)
As with the first two lists, observers are focusing more on who wasn’t represented rather than who was. And as with the first two lists, both Tencent and NetEase were absent once again. That raises the question of what the regulator may be trying to do, and whether this could have long-term ramifications for China’s two leading online game companies. Read Full Post…
Bottom line: Tencent’s sudden pulling of a popular game just days after its release shows no one is exempt from Beijing’s recent online entertainment clampdown, which could weigh on stocks of related company for the next few months.
Tencent gets wrist slapped by regulator
A new statement from leading online game operator Tencent(HKEx: 700) is dripping with contrition, following the sudden yanking of a new hit game from its platform that apparently didn’t pass muster with the regulator. This latest Tencent news, combined with some downbeat earnings from live broadcasting specialist Huya (Nasdaq: HUYA) and its parent YY (Nasdaq: YY), have cast a chill over Chinese gaming and video stocks, which took a beating in Tuesday trade.
Tencent has been leading the crowd, shedding 3.4 percent on Tuesday and down another 3.2 percent in early trade on Wednesday. Those two declines have collectively wiped out more than $4 billion in market value from one of the world’s most valuable Internet companies. The bloodbath was felt among the broader realm of Chinese companies that provide any form of video content over the Internet, be it games, live broadcasting or even traditional moves and TV shows. Read Full Post…
Bottom line: A new plan allowing offshore listed Chinese firms like Alibaba and Tencent to make secondary listings at home appears to have momentum and could stand a better than 50 percent chance of success.
China eyes new plan to bring home NY-, HK-listed firms
A mix of politics and business is in the air this week, as the annual National People’s Congress takes place in Beijing, including a concurrent gathering of business leaders who advise the nation’s legislature. Those leaders include most of the country’s leading high-tech CEOs, who are all getting peppered with questions about whether they would re-list at home if given the chance.
Most of those leaders are doing the politically correct thing and saying “of course,” including chiefs of Internet giants Baidu (Nasdaq: BIDU), Tencent (HKEx; 700) and Ctrip(Nasdaq: CTRP), just to name a few. (Chinese article) Such talk is really a bit cheap and would be quite impractical in the current market, since de-listing such massive firms from their current markets would require tens of billions of dollars in most cases, and even hundreds of billions in the case of a massive company like Tencent. Read Full Post…
Bottom line: Google has quietly resumed updates of its China mapping service in a bid to tap the booming local market for location-based services.
Google resumes China mapping updates
Are they or aren’t they? That’s the question going through everyone’s minds these days about Google’s(Nasdaq: GOOG) stealth return to China, following reports that the company has quietly re-launched its previously dormant mapping service in the market. In this case there are quite a few conflicting signals, including the one coming from Google itself, which says nothing has changed with its mapping service.
I was a bit surprised at Google’s definitive statement, since I can say with certainty that the company has indeed resumed updating its popular mapping service following a dormant period of at least a few years after shuttering its China-based search service in 2010. Last year there was similar word that Google’s map site had resumed service in China, and I went and checked the URL at the time. Read Full Post…
Bottom line: A new music re-licensing deal between Alibaba and Tencent, combined with a meeting between the copyright regulator and major online music sellers, hint at attempts to create a more level playing field in the space.
Alibaba, Tencent in music cross-licensing deal
A couple of items from the music sector are in the headlines today, showing how tricky the situation is becoming with copyrights and online licensing in China. One of those has two major players, the music services of Internet giants Alibaba (NYSE: BABA) and Tencent(HKEx: 700), signing an agreement to cross-license music to each other when one of them owns the rights to such music. The other has China’s copyright office actually calling a meeting between those two companies and two other major players, NetEase(Nasdaq: NTES) and Baidu(Nasdaq: BIDU), to discuss issues confronting the industry.
Two issues appear to be driving these two deals that appear to be related. One is concerns from the music industry that rights to their songs will become fragmented and confined to single platforms under the current licensing system, limiting consumer choice. Similar concerns might also be what’s driving the regulator to get involved as well. An interesting footnote to this might be whether the same thing could soon happen in the video licensing arena, which shares similar issues. Read Full Post…
Bottom line: Sohu founder Charles Zhang should privatize his company in the next year and then sell off the pieces, or risk see his dwindling empire slowly become worthless.
Sohu’s incredible shrinking empire
You know you’re a CEO when you can call results like those just released by Internet company Sohu(Nasdaq: SOHU) “solid”. Of course that’s my sarcastic assessment, after reading the latest quarterly report that absolutely nothing upbeat about it from one of China’s oldest Internet companies. Nearly all of the numbers in Sohu’s latest report were down, with the lone exception of its online search business, whose anemic growth shouldn’t excite anyone.
Also down was Sohu’s stock, which slumped 6.4 percent after the results came out and is rapidly approaching lows not seen for nearly a decade. All that brings us to my assertion that perhaps it’s time for founder Charles Zhang to consider the unthinkable and break up his company and sell of the various pieces while there are still potential buyers. If he waits too much longer, those pieces will continue to diminish in value to the point where nobody wants them. Read Full Post…
Bottom line: NetEase’s new global expansion could stand a good chance of success due to its strong record with self-developed titles, which could help it pass Baidu in market value over the next 1-2 years.
NetEase holds developer forum in San Francisco
The company that made its name from a series of games based on the famous Chinese novel Journey to the West is trying to turn that story into reality, as NetEase (Nasdaq: NTES) eyes expansion outside its home market. The West contained in NetEase’s latest announcement is quite different from the West in the classic novel, the former referring to North America and Europe while the latter refers to India.
But other similarities between the novel and this new global expansion do abound in NetEase’s new announcement that it has just held its first-ever developer’s forum in the West. In both cases, the main character is traveling into unfamiliar terrain in pursuit of major rewards. And in both cases, each faces big challenges before attaining those goals. Read Full Post…
Bottom line: Google will get permission from Beijing to open a Chinese version of its app Play Store later this year, most likely through a joint venture with NetEase or Tencent.
Google, NetEase talk China Play Store JV
The glacial return to China for Internet titan Google (Nasdaq: GOOG) is making its debut in the 2017 headlines, with word that the company is in talks to open a Chinese version of its app store with online game giant NetEase (Nasdaq: NTES). That tidbit nicely sets the stage for what’s likely to be a banner year for Google and possibly US Internet rival Facebook (Nasdaq: FB) in their race to see who can be first to plant a tent pole in China. Read Full Post…
Bottom line: NetEase’s finish at the top of a global ranking for mobile game downloads attests to its rising status in the sector, while the pork business of its founder Ding Lei also appears to be gaining traction after years of effort.
NetEase mobile games top Tencent in October
Perennial runner-up NetEase (Nasdaq: NTES) has suddenly vaulted into the champion’s spot on China’s mobile game leader board, unexpectedly passing Tencent (HKEx:) in an important metric for their industry. The surprise move is probably a fluke, and I expect Tencent will retake the top spot in the next rankings for most sales from online mobile game app downloads compiled by App Annie. Still, it does underscore why I’ve previously said that NetEase is probably the most underappreciated company among China’s top Internet players. Read Full Post…
The following press releases and news reports about China companies were carried on October 15-17. To view a full article or story, click on the link next to the headline.
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ChemChina, Sinochem in Talks on Possible $100 Bln Merger: Sources (English article)
Tencent (HKEx: 700) to Sign $3.5 Bln Loan to Finance Supercell Purchase (Chinese article)
Weibo (Nasdaq: WB) Has Nearly Eclipsed Twitter (NYSE: TWTR) by Market Value (English article)
Smartisan Denies Rumors to be Aquired by NetEase (Nasdaq: NTES) (Chinese article)
Tongcheng Eyes IPO in 3 Years After Merger with Wanda Travel (Chinese article)
